Waterford's legal bills way down since end of Millstone tax fight

Waterford - The town has dramatically reduced its legal bills since the costly 2002-08 battle with Millstone owner Dominion Resources, but officials say the $2.7 million they spent was worth it because the resulting property tax revenue is substantial.

Waterford's legal bills were as high as $1.2 million in fiscal year 2006, due mostly to $1.1 million in attorneys' fees from a lawsuit filed by Dominion Resources over the assessment of the Millstone nuclear power station.

"We looked at how much we would be shorting ourselves" if the town didn't go to court, First Selectman Dan Steward said on Wednesday. "So the tax return over the period of time that we will have to tax them in the long term does make it worthwhile to invest that upfront."

The lengthy battle started when Dominion contested the town's 2002 appraisal of Millstone at about $1.174 billion. The nuclear complex is located on 526 acres on Long Island Sound and has two fully functioning reactors, one shut-down reactor and numerous dry cask fuel storage buildings.

Dominion appealed to the Board of Assessment Appeals, saying the plant was worth $854 million. Shortly after the board denied Dominion's appeal in April 2003, the company filed a further appeal in New London Superior Court.

In November 2007 the case was concluded in the state's Court of Tax and Administrative Appeals in New Britain Superior Court. At the trial, Dominion said the property was worth about $1 billion. Judge Arnold W. Aronson ruled that the fair-market value of Millstone was $1.122 billion, nearly a split between what each party said the fair-market value was during the trial.

Ultimately, the two parties agreed in 2008 to appraise Millstone at $1.625 billion. Dominion agreed to a figure higher than the judge's $1.122 billion ruling because new construction has taken place at Millstone.

"I got to a point where I said I need to settle this, we can't continue because the legal costs were just outrageous," said Steward, who became first selectman in 2005. "You know - what you are paying these attorneys at $400 and $500 an hour ..."

In Connecticut, the assessed value of a property is 70 percent of the fair-market value, minus any tax credits. Property taxes are the main source of revenue for Connecticut municipalities.

The contested 2002 grand list assessment for Millstone was $753 million,which meant $12.8 million in property taxes for the town. Had the town not defended its appraisal in court, it could have received as little as $10.2 million in property taxes. Had the town won, it could have received as much as $14 million.

In the 1980s, when Millstone was owned by Northeast Utilities, its property taxes made up 74 to 84 percent of all the town's property tax revenue. Before deregulation forced Northeast Utilities to sell the plant, its property taxes based on the 1999 grand list were $33.7 million, or about 64 percent of the tax revenue. The property was appraised at that time at approximately $2.94 billion.

Today Millstone makes up about 34 percent of the town's property tax revenue and will pay about $26.3 millionin property taxes for the fiscal year that began July 1.

The town's property tax rate has nearly tripled to 24.05 mills in 2012 from its lowest rate in recent history, 8.67 in 1986.

Steward said he thinks the plant is worth more than it is valued at today, but "it's not that we are going to change it (agreement), we can't, and we are not going to," he said. "The court is not going to rule in our favor, we know that."

Since the lawsuit was settled, the town has paid $275,133 on average per year on attorneys' fees in general - 77 percent lower than in 2006. The town has also been able to plan on approximately $204 million in revenue from Dominion alone for fiscal years 2004 through 2014.